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TMG white paper discusses HCE technology

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DES MOINES, Iowa (7/7/14)--A new white paper from The Members Group addresses the impact a new technology could have on the mobile payments marketplace.

The technology--known as host card emulation (HCE)--is poised to make it not only possible, but beneficial, for community financial institutions (FIs) to deploy consumer-centric mobile payments solutions. 

Writing for an audience of FI leaders, Brian Day The Members Group senior product manager, opens the paper with a call for collaboration. "To bring mobile payments to the inevitable (albeit long-awaited) ignition point, tech developers and issuers will have to link up," Day writes. "HCE technology may be just the innovation to grease the wheels for such a marriage."

Introduced by Google with its Android KitKat update, HCE was built in response to wireless carriers blocking Google Wallet's access to the secure near-field communication (NFC) chips in their devices. HCE was recently endorsed by both MasterCard and Visa, and according to Day, it will benefit community FIs and consumers in two major ways.  HCE will keep card issuers in play and allow for a seamless user experience.

Day outlines several of the technologies that have the greatest potential for eventual consumer adoption.  He writes: "A lack of agreement on one core technology to power mobile payments has complicated issuer, merchant and consumer adoption. Simply put, a plethora of choices for both providers and consumers exists today. Among these options, three main technologies stand out as leaders in the emerging payments landscape. They are barcode plus cloud, bluetooth low-energy (BLE) and near-field communication (NFC)."

Day walks through each of the three, addressing pro-and-con points from the end-user, or consumer, perspective. Ultimately, he concludes the greatest promise for both consumers and FIs lies in the combination of HCE and NFC: "Just as card issuers have long pursued top-of-wallet positioning, very soon it will be top-of-app positioning they most cherish. With HCE and NFC working together, long-standing cardholder relationships are not only safe; they are poised to take off."
 
To download the white paper, use the link.